Tag Archive for: Negotiating Training

Navigating Healthcare Sales Negotiations in a Changing Landscape

in Healthcare Sales Negotiations/by Michael E. Sloopka

Navigating Healthcare Sales Negotiations in a Changing Landscape

Strategies and Tactics for Success in the Evolving Healthcare Market

Are you and your sales/marketing teams trying to address significant challenges and barriers when negotiating with healthcare institutions? In the rapidly evolving and challenging world of healthcare, it’s essential to adapt sales, marketing, and negotiation strategies to address the changing dynamics successfully.

Whether you’re dealing with hospitals, clinics, dental practices, imaging centres, group purchasing organizations (GPOs), or healthcare networks, this article will illuminate the evolving healthcare landscape and provide some valuable negotiation insights, strategies, and tips to improve results.

The Reality of Healthcare Sales Negotiations:

In today’s healthcare sector, sales negotiations are more complex than ever. Procurement teams are becoming savvier negotiators – they are becoming skilled at evaluating vendors and leveraging situational power for cost reductions, added value delivery, and better contractual terms and conditions to achieve savings for strained budgets. Despite their significant market dominance, even the billion-dollar healthcare suppliers will eventually face customer pressure to reduce pricing and add incremental value to win deals.

The following challenges facing healthcare sales and marketing organizations are problematic:

Surgeons and key opinion leaders (KOL) no longer have the influencing or decision-making power they once did.
Increased sophistication in healthcare product/services sourcing and assessment processes.
Companies with proprietary healthcare products and innovations struggle for market share.
Tight hospital budgets with high non-clinical overhead costs.
Difficulty in reaching decision-makers.
Turnover in healthcare procurement personnel.
Healthcare value-assessment committees lengthening the sales cycle.
Challenges in scheduling product evaluations and trials.
Procurement’s obsession with cost savings.
The continued use of request for proposal (RFP), request for quote (RFQ), and request for information (RFI) processes.
Elongated selling cycles, poorly written value propositions, and weak day-to-day communication practices.
Consultants are driving cost-cutting initiatives. …and many more.

In this article, I’ll delve into some of the intricacies of healthcare sales negotiations. While I can’t cover everything in this article, I’ll provide several helpful insights, strategies, and tips to navigate this ever-changing environment.

The Changing Face of Healthcare Sales Negotiations:

Gone are the days when surgeons and clinicians solely drove product selection in healthcare. Today, procurement departments wield significant influence, and sales teams must adapt. Investing in negotiating skills training and revising your value proposition messaging is critical for success.

The Impact of Rising Healthcare Costs:

With healthcare costs continuously rising, institutions must cut expenditures while maintaining quality, value-based patient care. Healthcare sales teams must understand the financial pressures faced by all members of the institution’s ‘buying centre’ and align their offerings and value propositions accordingly.

Negotiating with Procurement: A New Ballgame:

Traditionally, healthcare sales negotiations focused on surgeons and clinicians. Now, suppliers must cater to the demands of procurement teams. Don’t overwhelm healthcare procurement and supply chain personnel with too much clinical data; put all the regulatory and clinical information and detailed product specifications in the exhibit or appendix sections at the back of your presentations or proposals (where they belong.) Don’t waste time showing supply chain personal information that will not influence the final decision.

Additional Insights and Tips for Successful Healthcare Sales Negotiation:

Understand the Procurement Process: Learn procurement teams’ decision-making criteria and priorities.
Understand the Buying Centre: Most sales organizations I teach need to learn how to develop a better working knowledge of the people in any institution who make or influence decisions.
The Sales/Marketing Challenge: Improve alignment and cooperation between your company’s sales, marketing, and product management teams.
Do Your Research: Carefully and thoroughly research customer personnel and information about each institution or customer.
Stay Informed: Keep up with non-clinical healthcare industry trends, regulations, and technologies.
Customize Your Approach: Tailor sales and negotiation strategies to each healthcare institution.
Contract Negotiations: Understand how negotiations impact letters of agreement, supply agreements, and contracts. Most organizations have seriously flawed contracts.
Emphasize Value and Cost Effectiveness: Highlight the value and cost-effectiveness of your products and/or services. Also, determine the ‘switching costs’ if your company is the incumbent vendor for capital equipment, medical devices, equipment or supplies, and there is a risk of losing business to a lower-priced competitor.
Build Strong Relationships: Foster positive relationships with procurement professionals. Don’t avoid these people. Don’t wait to be told by surgeons or other clinical personnel that you must “meet with purchasing” – after you’ve let the “value cat out of the bag.”

Conclusion:

In any aspect of healthcare, a one-size-fits-all sales, marketing, and negotiation approach no longer works. As procurement teams gain prominence and dominance, understanding their needs is critical to successful negotiations. As healthcare costs rise, providing cost-effective solutions becomes crucial.

Suppliers must spend less time on clinical product education/training and provide sales, marketing, and cross-functional personnel with training in real-world business skills. Companies need expert troubleshooting advice and negotiation skills training to help build strong relationships with healthcare procurement professionals to secure mutually beneficial deals – without compromising patient care or relationships with clinical personnel.

Remember: A negotiated dollar is a bottom-line dollar. You can’t make – or save money faster than when you’re negotiating.

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Is Splitting the Difference a Winning Negotiation Strategy or a Flawed Approach?

in Negotiation Gambits/by Michael E. Sloopka

Is Splitting the Difference a Winning Negotiation Strategy or a Flawed Approach?

Unpacking the Pros and Cons of Splitting the Difference in Negotiations

Negotiation is a dynamic art that requires a deep and thorough understanding of negotiating strategies, tactics, techniques, and tips and the ability to adapt to various situations. One common and often misunderstood and misapplied strategy in negotiation is “splitting the difference.”

This is especially true in commercial negotiations involving monetary and non-monetary concessions that provide value.

While “splitting the difference” may seem straightforward and fair, there are pros and cons to consider when deciding whether to employ this strategy in your negotiations. In our negotiating skills training programs and negotiation coaching sessions, we encourage “splitting the difference” when the circumstances support using this negotiating gambit (chess parlance meaning manoeuvre for advantage.)

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The Pros of Splitting the Difference:

Quick Resolution: Splitting the difference can expedite the negotiation process, making it an attractive option when time is of the essence. It’s a simple way to find a middle ground and move forward.
Fairness: This method can create a perception of fairness in the negotiation. Parties may feel both sides are making equal concessions, promoting goodwill and cooperation.
Maintaining Relationships: When dealing with long-term “partners” or maintaining professional relationships, splitting the difference can prevent hard feelings and keep lines of communication open.
Simplicity: When appropriately taught and understood in the proper context, splitting the difference is easy to understand and execute, making it accessible for experienced and novice negotiators. When splitting the difference, people must learn and use correct verbal and written phrases and scripts – or using this negotiation gambit could backfire.

The Cons of Splitting the Difference:

Missed Value: Splitting the difference might mean leaving value on the table. It must consider each party’s specific needs and priorities, potentially resulting in a suboptimal outcome.
Lack of Creativity: This strategy can stifle creative problem-solving. Instead of exploring innovative solutions, negotiators settle for the middle ground.
Ineffective in Complex Negotiations: In intricate or high-stakes negotiations, splitting the difference often needs to be revised. It needs to have the sophistication required for complicated deals.
Presumption of Equal Concessions: While it may seem fair, in some cases, one side may be making a more significant concession, creating an imbalance.

How Splitting The Difference Can Be Used to Your Advantage

The Negotiating Gambit: It’s generally a good strategy in a negotiation not to offer to split the difference. There are some situations during a negotiation where it’s an excellent strategy to get the other side to split the difference.

The use of this negotiation strategy depends on where you are in your negotiating range during the negotiation. Your negotiating range is between your opening negotiating position (initially, ask for more than you want and expect to get – based on the Maximum Plausible Position – MPP) and your desired outcome (your goal).

Suppose you are on the high side of your desired outcome (goal), between your desired outcome and opening negotiating position. In that case, you can suggest to the other side to split the difference, which would result in your successfully being able to bracket between your high position on your negotiating range. It creates the perception that you made a concession, and what you did was simply bracket to achieve a better outcome.

Example: In a sales negotiation, you proposed a price for a new piece of equipment to a customer at $31,997.95, plus taxes and shipping. The price you proposed is based on your opening negotiating position. Your desired outcome (goal) for the negotiation is to sell the equipment at $26,995.95, plus taxes and shipping.

The customer doesn’t have the budget for your proposed asking price and suggests a price of $25,000.00. Based on this, you’re $6,997.95 lower than your opening negotiating position and $1,995.95 lower than your desired outcome. Now, it’s an intelligent strategy to suggest to the other side to split the difference.

You could say something like this to the customer: “We’re not that far apart, so does it make sense to split the difference? We’ll each compromise $3,498.55 and agree on the purchase price of $28,499.40, plus taxes and shipping.”

By suggesting to the other side to split the difference and by properly bracketing between your opening negotiating position and your desired outcome, you have effectively indicated that the equipment be sold for $1,503.45 more than your desired outcome (your goal). You’ve created a Win-Win outcome by conceding some of your negotiating range to the customer.

The Negotiating Countergambit: You can protect yourself from splitting the difference yourself in a negotiation by using the Higher Authority gambit.

You can say the following to a customer: “We’re only a few thousand dollars apart on a piece of equipment that will improve your operations. It seems a shame to walk away from this after the time we’ve both invested. If you propose a reasonable compromise between our initial competitive price proposal and your counteroffer, I’ll take it to my finance people and see what I can do.”

Why a Former FBI Hostage Negotiator’s Approach Differs:

A former FBI hostage negotiator advocates for an alternative approach in his co-authored book, “Never Split the Difference.” In the book, the co-author proposes that splitting the difference only sometimes serves a person’s best interests. The co-author emphasizes using “tactical empathy, active listening, and calibrated questions” to uncover your counterpart’s true motivations and priorities.

In contrast to splitting the difference, the co-author encourages people to seek out “black swans” –unexpected and valuable concessions that might result in a more favourable deal.

At negotiatingcoach.com, we call this “Broadening the Scope” of the negotiation. It’s important to understand when and how to properly split the difference in a negotiation.

Conclusion

While splitting the difference can be a quick and straightforward way to resolve negotiations and maintain relationships, it may not always be the most effective strategy. Understanding the pros and cons of this approach is essential for any negotiator. There are alternative perspectives on this topic that challenge the status quo.

In your next negotiation, consider the specific circumstances and your counterpart’s motivations before deciding to split the difference – or aim for something more. Remember, successful negotiation requires a versatile toolkit of strategies and tactics, and the right one depends on the situation.